All Politics is now Global

Export World Champion under Pressure

BERLIN (Own report) – With intense shuttle diplomacy, members of the German government are seeking to avert the impending US punitive tariffs on European goods and the loss of access to the important US market. Following Germany’s Finance Minster Olaf Scholz’s visit to the US capital yesterday, Chancellor Angela Merkel is expected in Washington on Friday. Already in the run up to these visits, Berlin seems ready to envisage a revival of the Transatlantic Trade and Investment Partnership (TTIP). This strategic decision is accompanied by a clear frontline position against China, as was resolutely demanded by the Trump administration. In addition, German-Russian business relations are increasingly under attack in Washington. At the same time, EU criticism of Germany’s unilateral trade policies is growing. Germany’s export oriented economy is particularly vulnerable to the protectionism that is gaining strength on a global scale. Berlin’s Beggar-thy-Neighbor-Policy could prove a strategic disadvantage under these new global economic conditions.

Shuttle Diplomacy

The Trump administration’s punitive tariffs on aluminum and steel imports into the USA – from which the EU has been exempted until May 1 – have led to an intense shuttle diplomacy by top German politicians with Washington. Berlin and Brussels have until the end of April to avert a trade war through far-reaching concessions to the United States. Following Germany’s Minster of the Economy Peter Altmaier’s visit to the US capital in mid-March, to discuss the benchmarks of an EU-US trade agreement,[1] Vice-Chancellor and Finance Minister Olaf Scholz went to Washington yesterday. In a 30 minute “exchange of views” with Vice President Mike Pence, they emphasized the importance of free global trade and the unswerving German-US friendship. The United States is “an important ally of our country” and the transatlantic partnership a “pillar of our foreign policy,” the finance minister underlined.[2]

TTIP 2.0

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“Either With Us or With Putin”

Now that Berlin has obviously – under pressure from Washington – chosen the transatlantic side in the upcoming US-China trade war, the United States is using the sanctions against Russia to threaten Germany’s dominant position in the eurozone. According to media in the USA, Germany, with almost 40 percent of the West’s export losses is the country most affected by the sanctions policy, while other geopolitically significant stakeholders such as the United Kingdom, France and the United States are much less affected.[6] Russian news agencies reported Thursday that, Berlin will seek “exemptions” from the most recent US sanctions for German companies, particularly Daimler, Volkswagen and Siemens.[7] The visits to Washington by the finance minister and the chancellor are aimed at changing Washington’s mind on the sanctions policy, it is reported, because the new sanctions would endanger the long-term German-Russian joint ventures valued at hundreds of millions of euros.[8] Berlin is also continuing its persistent attempts to push through the expansion of the German-Russian Baltic pipeline (Nord Stream 2), under strong opposition from Washington and Warsaw. BASF and Wintershall, the German companies involved in the pipeline project, have been under strong US penalties since August. Germany could easily find itself as part of London and Washington’s new favorite narrative: “you’re either with us…or you’re with Putin.”[9]

The EU’s “Undisputed Leader”

Washington’s pressure on Germany, the long-time export world champion, is accompanied by an on-going crisis in German-French relations – caused by Germany having thwarted France’s plans for reforming the Eurozone.[10] It is significant that Chancellor Merkel will visit the White House just a few days after President Emmanuel Macron. The EU’s two leading powers are seeking to reach agreements with Washington, independently from one another, in their respective national interests. There is no sign of the frequently advocated common EU approach toward Washington. Despite all the confessions heard in Berlin yesterday, Paris and Berlin cannot even agree on a common approach for confronting the looming trade war. The German government is the one that unilaterally surged ahead in pursuit of its national interests. Germany’s Economic Affairs Minister Peter Altmaier’s Washington visit has caused much resentment in both Paris and Brussels, it was reported.[11] Rather than let the EU trade commissioner try to ward off a nascent trade war, the German Economic Affairs Minister Peter Altmaier was already in the US to defend German interests. It was a direct insult for both the European Commission and France. Germany continues to behave as the EU’s “undisputed leader.”